(b)liabilities for the lifetime allowance charge in respect of benefit crystallisation events occurring on or before the relevant day;

(c)20liabilities for the scheme sanction charge in respect of scheme chargeable payments treated under section 185A or 185F as having been made by the pension scheme in tax years earlier than the one in which the relevant day falls;

(d)any liability for the scheme sanction charge in respect of the 25relevant fraction of any scheme chargeable payment treated under section 185A as having been made by the pension scheme in the tax year in which the relevant day falls;

(e)where the pension scheme is treated under section 185F as having made a scheme chargeable payment in the tax year in 30which the relevant day falls and there is a relevant net gain, any liability for the scheme sanction charge in respect of the relevant amount;

(f)any liability to pay interest in respect of a liability mentioned in paragraphs (a) to (e) arising at any time.

(a)apart from that subsection, losses in relation to which section 185G(10) applies would be included in the total amount mentioned in subsection (9)(a)(ii), and

(b)the losses exceed the gains—

(i)10which are included in the total amount mentioned in subsection (9)(a)(i), and

(ii)from which the losses can be deducted in accordance with section 185G(10).

(11)The losses are not to be included in the total amount mentioned in 15subsection (9)(a)(ii) so far as they exceed the gains.

272B Liabilities of scheme administrator appointed by independent trustee etc

(1)This section applies in relation to a person (“Q”) who is, or is one of the persons who are, the scheme administrator of a registered 20pension scheme where Q’s appointment as such takes effect at a time when the pension scheme has one or more independent trustees.

(2)Q does not assume any liability falling within section 272A(7) which Q would otherwise assume.

(3)In relation to any liability falling within section 272A(7), in section 25272(4) references to persons who control the management of the pension scheme do not include Q.

(4)Subsections (2) and (3) do not apply if Q is, or is one of the persons who are, the scheme administrator at any time before the relevant day.

(5)30In this section, and in section 272A as it applies for the purposes of this section, “the relevant day” means the first day on which the pension scheme has an independent trustee (whether or not there are days between that day and the day on which Q’s appointment takes effect on which the pension scheme has no independent trustees).

272C35 Former scheme administrator etc to retain liability

(1)This section applies in relation to a liability which, by reason of section 272A(4), is not assumed by P (in which case “the relevant day” is to be read in accordance with section 272A(3)).

(2)This section also applies in relation to a liability which, by reason of 40section 272B(2), is not assumed by Q (in which case “the relevant day” is to be read in accordance with section 272B(5)).

(3)The liability is to be retained or assumed by the person who is, or the persons who are, the scheme administrator immediately before the relevant day (unless dead or having ceased to exist).

(4)45If there is no scheme administrator immediately before the relevant day, the liability is to be retained or assumed by the person who was,

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or the persons who were, the scheme administrator when there last was a scheme administrator before the relevant day (unless dead or having ceased to exist).

(5)Nothing in section 271 prevents a person from having (and 5continuing to have) the liability by reason of subsection (3) or (4).

(b)no-one who has the liability by reason of subsection (3) or (4)can be traced, or

(c)10the person who has, or all the persons who have, the liability by reason of subsection (3) or (4) are in serious default (as determined in accordance with section 272(6)).

(7)The liability is to be assumed by the person or persons determined in accordance with section 272(4).

(8)15Section 272(5) applies in relation to a person who assumes the liability by reason of subsection (7) as it applies in relation to a person who assumes a liability by reason of section 272.

(9)Nothing in this section prevents any person from being subject to the liability apart from this section (in addition to any person who is 20subject to the liability by reason of this section), and in particular the liability continues to be a liability of the scheme administrator for the purposes of section 271(2).

(10)If a person assumes the liability under section 271(2) at a time after P or Q’s appointment as, or as one of the persons who are, the scheme 25administrator has ceased, the person who has, or the persons who have, the liability by reason of subsection (3) or (4) is, or are, released from the liability.

(11)A person who has, or persons who have, the liability by reason of subsection (3) or (4) may apply to an officer of Revenue and Customs 30to be released from the liability.

(12)Section 271(6) to (13) applies in relation to an application under subsection (11) as it applies in relation to an application under section 271(5).”

“(1A)This section also applies in relation to a registered pension scheme if—

(a)a person has, or persons have, by reason of section 272C(7)assumed a liability to pay tax (or interest on tax) by virtue of 40section 239 (scheme sanction charge) in respect of the whole or a part of a scheme chargeable payment falling within section 241(1)(b) or (c) made (or treated as having been made) by the pension scheme,

(b)that person, or each of those persons, has failed (in whole or 45in part) to satisfy the liability, and

(c)that person, or each of those persons, has either died or ceased to exist or is a person in whose case an officer of

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Revenue and Customs considers the person’s failure to satisfy the liability to be of a serious nature.”

7In section 503 (charge on partnership share money) in subsection (2), in the entry for paragraph 56, for “withdrawal of plan approval” substitute “plan 15ceasing to be a Schedule 2 SIP”.

8(1)Section 506 (charge on partnership shares ceasing to be subject to plan) is amended as follows.

(2)In subsection (2) for “market value of the shares at the exit date” substitute “relevant amount”.

(3)20After subsection (2) insert—

“(2A)Subject to subsection (2B), in subsection (2) “the relevant amount” means the market value of the shares at the exit date.

(2B)If the shares cease to be subject to the plan by virtue of a provision of the kind mentioned in paragraph 43(2B) of Schedule 2 (provision 25requiring partnership shares to be offered for sale), in subsection (2) “the relevant amount” means the lesser of—

(a)the amount of partnership share money used to acquire the shares, and

(b)the market value of the shares at the time they are offered for 30sale.

(2C)Paragraph 92(2) of Schedule 2 (market value of shares subject to a restriction) applies for the purposes of subsection (2B)(b).”

(4)After subsection (3) insert—

“(3A)If the shares cease to be subject to the plan by virtue of a provision of 35the kind mentioned in paragraph 43(2B) of Schedule 2, in subsection (3)(b) the reference to the market value of the shares at the exit date is to be read as a reference to the market value of the shares at the time they are offered for sale (as determined in accordance with paragraph 92(2) of Schedule 2 if relevant).”

“(A1)For the purposes of the SIP code a share incentive plan (a “SIP”) is a Schedule 2 SIP if the requirements of Parts 2 to 9 of this Schedule are met in relation to the SIP.”

(3)For sub-paragraph (4) substitute—

“(4)15Sub-paragraph (A1) is subject to Part 10 of this Schedule which—

(a)requires notice of a plan to be given to Her Majesty’s Revenue and Customs (“HMRC”) in order for the plan to be a Schedule 2 SIP (see paragraph 81A(1)),

(b)provides for a plan in relation to which such notice is given 20to be a Schedule 2 SIP (see paragraph 81A(4)), and

(c)gives power to HMRC to enquire into a plan and to decide that the plan should not be a Schedule 2 SIP (see paragraphs 81F to 81I).”

17In the cross-heading before paragraph 6 omit “for approval”.

18(1)25Paragraph 6 (general requirements for SIPs) is amended as follows.

(2)Make the existing text sub-paragraph (1).

(3)After the new sub-paragraph (1) insert—

“(2)The requirements of this Part are also to be taken to include the requirements of paragraphs 89 and 90 (plan termination notices 30etc).”

19(1)Paragraph 7 (the purpose of the plan) is amended as follows.

(2)In sub-paragraph (1)—

(a)after “provide” insert “, in accordance with this Schedule,”, and

(b)for “nature” substitute “form”.

(3)35After sub-paragraph (1) insert—

“(1A)The plan must not provide benefits to employees otherwise than in accordance with this Schedule.

(1B)For example, the plan must not provide cash to employees as an alternative to shares.

(1C)40Sub-paragraph (1A) does not prohibit an employee receiving a benefit from a company as a result of any shares in that company

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being held on the employee’s behalf under the plan where the employee would have received the same benefit from the company had the shares been acquired by the employee otherwise than by virtue of the plan.”

(4)5Omit sub-paragraph (2).

20In paragraph 18 (requirement not to participate in other SIPs) in sub-paragraph (1) for “approved” substitute “Schedule 2”.

21In paragraph 18A (participation in more than one connected SIP) in sub-paragraph (1) for “approved” substitute “Schedule 2”.

“(2B)Partnership shares may (notwithstanding sub-paragraph (2A) if 15relevant) be subject to provision requiring partnership shares acquired on behalf of an employee to be offered for sale but only if the requirement of sub-paragraph (2C) is met.

(2C)The consideration at which the shares are required to be offered for sale must be at least equal to—

(a)20the amount of partnership share money applied in acquiring the shares on behalf of the employee, or

(b)if lower, the market value of the shares at the time they are offered for sale.”

24In the cross-heading before paragraph 56 for “withdrawal of approval” 25substitute “plan ceasing to be a Schedule 2 SIP”.

(2)In sub-paragraph (1) for “approval of the plan is withdrawn (see paragraph 83)” substitute “plan is not to be a Schedule 2 SIP by virtue of paragraph 81H30or 81I”.

(3)In sub-paragraph (2) for the words from “notice” to the end substitute “the relevant day”.

(4)After sub-paragraph (2) insert—

“(2A)If the plan is not to be a Schedule 2 SIP by virtue of paragraph 81H, 35in sub-paragraph (2) “the relevant day” means—

(a)the last day of the period in which notice of an appeal under paragraph 81K(2)(a) may be given, or

(b)if notice of such an appeal is given, the day on which the appeal is determined or withdrawn.

(2B)40If the plan is not to be a Schedule 2 SIP by virtue of paragraph 81I, in sub-paragraph (2) “the relevant day” means—

(a)the last day of the period in which notice of an appeal under paragraph 81K(3) may be given, or

(b)if notice of such an appeal is given, the day on which the 45appeal is determined or withdrawn.”

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26(1)Paragraph 65 (general requirements as to dividend shares) is amended as follows.

(2)Make the existing text sub-paragraph (1).

(3)After the new sub-paragraph (1) insert—

“(2)5Dividend shares may (notwithstanding sub-paragraph (1)(b) if relevant) be subject to provision requiring dividend shares acquired on behalf of an employee to be offered for sale but only if the requirement of sub-paragraph (3) is met.

(3)The consideration at which the shares are required to be offered 10for sale must be at least equal to—

(a)the amount of the cash dividends applied in acquiring the shares on behalf of the employee, or

(b)if lower, the market value of the shares at the time they are offered for sale.”

“ Part 10Notification of plans, annual returns and enquiries

81A20Notice of SIP to be given to HMRC

(1)For a SIP to be a Schedule 2 SIP, notice of the SIP must be given to Her Majesty’s Revenue and Customs (“HMRC”).

(2)The notice must—

(a)be given by the company,

(b)25contain, or be accompanied by, such information as HMRCmay require, and

(c)contain a declaration within sub-paragraph (3) made by such persons as HMRC may require.

(3)A declaration within this sub-paragraph is a declaration—

(a)30that the requirements of Parts 2 to 9 of this Schedule are met in relation to the SIP, and

(b)if the declaration is made after the first date on which awards of shares are made under the SIP (“the first award date”), that those requirements—

(i)35were met in relation to those awards of shares, and

(ii)have otherwise been met in relation to the SIP at all times on or after the first award date when shares appropriated to, or acquired on behalf of, individuals under the SIP have been held under the 40SIP.

(4)If notice is given under this paragraph in relation to a SIP, for the purposes of the SIP code the SIP is to be a Schedule 2 SIP at all times on and after the relevant date (but not before that date).

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(5)But if the notice is given after the initial notification deadline, the SIP is to be a Schedule 2 SIP only from the beginning of the relevant tax year.

(6)For the purposes of this Part—

5“the initial notification deadline” is 6 July in the tax year following that in which the first award date falls,

“the relevant date” is—

(a)

the date on which the declaration within sub-paragraph (3) is made, or

(b)

10if that declaration is made after the first award date, the first award date, and

“the relevant tax year” is—

(a)

the tax year in which the notice under this paragraph is given, or

(b)

15if that notice is given on or before 6 July in that tax year, the preceding tax year.

(7)Sub-paragraph (4) is subject to the following paragraphs of this Part.

81BAnnual returns

(1)20This paragraph applies if notice is given in relation to a SIP under paragraph 81A.

(2)The company must give to HMRC a return for the tax year in which the relevant date falls and for each subsequent tax year (subject to sub-paragraph (9)).

(3)25If paragraph 81A(5) applies in relation to the SIP, in sub-paragraph (2) the reference to the tax year in which the relevant date falls is to be read as a reference to the relevant tax year.

(4)A return for a tax year must—

(a)contain, or be accompanied by, such information as HMRC30may require, and

(b)be given on or before 6 July in the following tax year.

(5)The information which may be required under sub-paragraph (4)(a) includes (in particular) information to enable HMRC to determine the liability to tax, including capital gains tax, of—

(a)35any person who has participated in the SIP, or

(b)any other person whose liability to tax the operation of the SIP is relevant to.

(6)If during a tax year an alteration is made in a key feature of—

(a)the SIP, or

(b)40the plan trust,

the return for the tax year must contain a declaration within sub-paragraph (7) made by such persons as HMRC may require.

(7)A declaration within this sub-paragraph is a declaration that the alteration has not caused the requirements of Parts 2 to 9 of this 45Schedule not to be met in relation to the SIP.

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(8)For the purposes of sub-paragraph (6) a “key feature” of a SIP or plan trust is a provision of the SIP or plan trust which is necessary in order for the requirements of Parts 2 to 9 of this Schedule to be met in relation to the SIP.

(9)5A return is not required for any tax year following that in which the termination condition is met in relation to the SIP.

(10)For the purposes of this Part “the termination condition” is met in relation to a SIP when—

(a)a plan termination notice has been issued in relation to it 10under paragraph 89, and

(b)all the requirements under paragraphs 56(3), 68(4)(c) and 90 have been met by the trustees.

(11)If the company becomes aware that—

(a)anything which should have been included in, or should 15have accompanied, a return for a tax year was not included in, or did not accompany, the return,

(b)anything which should not have been included in, or should not have accompanied, a return for a tax year was included in, or accompanied, the return, or

(c)20any other error or inaccuracy has occurred in relation to a return for a tax year,

the company must give an amended return correcting the position to HMRC without delay.

(1)This paragraph applies if the company fails to give a return for a 25tax year (containing, or accompanied by, all required information and declarations) on or before the date mentioned in paragraph 81B(4)(b) (“the date for delivery”).

(2)The company is liable for a penalty of £100.

(3)If the company’s failure continues after the end of the period of 3 30months beginning with the date for delivery, the company is liable for a further penalty of £300.

(4)If the company’s failure continues after the end of the period of 6 months beginning with the date for delivery, the company is liable for a further penalty of £300.

(5)35The company is liable for a further penalty under this sub-paragraph if—

(a)the company’s failure continues after the end of the period of 9 months beginning with the date for delivery,

(b)HMRC decide that such a penalty should be payable, and

(c)40HMRC give notice to the company specifying the period in respect of which the penalty is payable.

(The company may be liable for more than one penalty under this sub-paragraph.)

(6)The penalty under sub-paragraph (5) is £10 for each day that the 45failure continues during the period specified in the notice under sub-paragraph (5)(c).